Question

	Investment Center
	A				B
Sales	$	?			$	11,500,000
Net income	$	453,000			$	?
Average invested assets	$	1,510,000			$	?
Profit margin		6	%			?	%
Investment turnover		?				2.0
Return on investment		?	%			12	%

Use the information in the following table to compute each department’s contribution to overhead (both in dollars and as a percent). (Round your final answers to 2 decimal places.)
  

Profit Margin: Choose Numerator / Choose Denominator: = Profit Margin Investment Center Profit margin 6.00% Investment Turnover: Choose Numerator: = Investment Turnover 1 Choose Denominator: ID Investment Center = Investment turnover 2.00 Return on investment: Choose Numerator: I Choose Denominator: Return on investment Investment Center = Return on investment A 12.00%

Answer 1

C Sales Net income Average invested assets Profit margin Investment turnover Return on investment $ 7,550,000 $ 453,000 $ 1,510,000 6% 5.00 30.00% $11,500,000 $ 690,000 $ 5,750,000 6.00% 2.00 12.00%

Working note:

C D Sales Net income Average invested assets Profit margin Investment turnover Return on investment А в =C4/C6 11500000 453000 =D5*D8 1510000 =D3/D7 0.06 =D4/D3 C3/C5 =C4/C5 0.12

Answer:

Choose Numerator: Chooses Denominator (= Profit Margin Investment Center Net income / Sales = Profit Margin 453,000/ 7550000 = 690,000 / 11,500,000 = 6% 6.0% Choose Numerator: / Chooses Denominator = Investment turnover Investment Center Sales / Average invested asset = Investment turnover 7,550,000/ 1,510,000/= 5.00 11,500,000 / 5,750,000 = 2.00 Choose Numerator: /Chooses Denominator = Return on investment Investment Center Net income /Average invested asset=Return on investment 453,000 / 1,510,000 = 30% 690,000/ 5,750,000 = 12.0%